Archive for May, 2013



1110 Series: “I certify this is not illegal.”

A blanket is not a lawn dart.

Not a lawn dart.

Yesterday, I discussed how the Commission fell short in considering and presenting the costs of our 1110 rule (on certificates of compliance). Today, I examine how we (mis)handled the tricky question of how the certificate rule fits with banned products.

The Consumer Product Safety Improvement Act of 2008 handed us a seemingly strange mandate. We were to require any manufacturer or importer of a consumer product to issue a certificate specifying any “rule, ban, standard, or regulation applicable to the product” and certifying conformity thereto. For rules, standards, and regulations, that makes plain enough sense, but certifying that your product is not banned might seem a little odd. Read too broadly, requiring something to certify that it is not banned could lead to absurd results. Think of requiring baby blankets to certify that they are not lawn darts. Or a hammer needing to certify that it is not general apparel containing asbestos.

Congress left it to us to implement this requirement reasonably. Our proposal almost does so, but, as with the costs, we have buried the lede. Portions of the rule discuss how individual bans interact with the certificate rule, but the rule does not provide any general guidelines to help a company determine if a ban relevant to its products requires certifying, “this is not banned.”

Our staff strived mightily to give some reasonable content to the requirement. They looked through the CPSC’s bans and saw that some appear to ban whole categories of products, while others ban only part of a product category. In particular, if a product was subject to a specific test, it appears easier to identify the products to be tested, and those that could pass the test would have to certify to the ban. (Those that failed would, obviously, be banned.) Some of staff’s helpful language appears in the rule’s preamble, but preambles do not appear in the Code of Federal Regulations, where companies and their counsel will look in years to come. Following staff’s efforts, I proposed amending the draft NPR to include this principle in the rule.

Certificates are required for products which are subject to a ban when the banned characteristics defined by the language of the ban do not define the whole product category within which the banned products fall and the products are not specifically excluded from the ban.

I also wanted to ask, in our request for comment, if our ban certificate language was clear. My colleagues rejected both these ideas, though they did at least agree to ask the public about staff’s assessment as expressed in the preamble.  Where failing to include a required certificate could trigger civil or even criminal penalties, I think we owe a cogent explanation of the rule, and I hope you will tell us what you think of the principle, its application as staff indicated, and whether the principle belongs in the actual rule.

More of my thoughts on the weaknesses of our 1110 proposal tomorrow.

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1110 Series: Hiding the Ball?

Last week, the Commission proposed an update for our rule for certificates of compliance, known as the 1110 rule (part 1110 of title 16 of the Code of Federal Regulations). As the final piece in the testing and certification puzzle created by 2008’s Consumer Product Safety Improvement Act, this rule needed changes. While my colleagues were willing to improve some  problems with the way this rule has functioned in the market—and get public participation in this revision— I was disheartened that we could not find more common ground in trying to craft a rule that would rationalize the certificate requirements.

Ball

One of my biggest frustrations was that my colleagues were unwilling not just to do more to reduce the annual costs of this rule but even to be upfront in the way we presented its costs to the public. I wanted to include a chart that would lay out what we expect this change to cost in concert with the rule it replaces and the rules it supports (parts 1107 and 1109, the testing and certification rules for children’s products and their component parts). My colleagues insisted that we only needed to talk about the costs presented in the analysis prepared for this specific set of amendments. None of our rules operates in a vacuum, and the original 1110 rule was short on economic analysis because of the tiny 90-day window we had to pass it, so I thought it more transparent to give the public a chance to see and comment on the total tab. After all, companies don’t have the choice of conforming just with the new language—they have to follow all of our rules—so it is inconsistent with reality to tell people about only the new costs.

Since my colleagues refused to include this vital information, I have posted it here. The chart below breaks down how each component of the certificate rule adds to the prices consumers pay. Remember these are annual costs—and will be incurred year after year. Note also that this does not account for the actual set-up costs already expended to create and maintain the certificates, nor does it necessarily account for the costs of changes needed to comply with this proposal. And remember that these numbers apply only to paperwork—the costs of these sister rules are surely much, much larger.

Requirements

General Certificates of Conformity

Children’s Product Certificates

Document test results

$118 million[1]

 

$216.4 million[2]

Create certificate

Disclose certificate

$ 14.9 million[3]

File certificate with CBP

$56 million[4]

$18.7 million[5]

Subtotal

$174.2 million

$250 million

Total

$424.2 million

I’ll talk about more of my concerns with the rule change we just proposed—and the stilted process that led to it—the rest of the week, but I wanted to put the bottom line up front, just as we should have done in the rule.


[1] Pt. 1110 PRA (March 2013)

[2] Pts. 1107 & 1109 PRAs (November 2011)

[3] Pt. 1110 PRA (March 2013)

[4] Pt. 1110 PRA (March 2013)

[5] Pt. 1110 PRA (March 2013)


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